Why the Philippines won’t be the next Asian miracle

The Philippines rolled out the red carpet on Thursday to some 600 global businesspeople and policymakers from 30 countries in the much-touted Asia edition of the World Economic Forum (WEF), with the aim of showcasing recent economic gains to the region and the rest of the world.

The country is no longer the ‘sick man of Asia’, which for decades lagged behind its neighbours, top government officials said, noting that the current administration of President Benigno Aquino is now reaping investment-grade ratings for its anti-corruption campaign.

With economic growth one of the fastest rates in the region, at 7.2 per cent last year, reforms are bearing fruit, said the country’s head of the Tourism Department, Cabinet Secretary Ramon Jimenez.

Touting the Philippines as the next Asian miracle, Jimenez said the government has made significant progress in putting the Philippines back on the radar screen of investors and in restoring people’s faith in the government.

‘We believe it is the next Asian miracle. It started with the restoration of our trust in leadership and is now on full gallop because the people of the Philippines have regained their trust in the future,’ Jimenez said at the opening of the two-day WEF at the posh and glittering Makati Shangri-la Hotel in Manila.

As this was happening, protesters braved truncheon-wielding police officers some kilometres from the hotel, to criticize the government’s hype on what is commonly known as Asia’s Davos (in reference to the annual WEF meetings in Switzerland).

‘Labels such as “Asia’s next miracle” and “Asia’s rising star” are all empty advertisements meant to make the Philippines popular to investors,’ said the non-governmental IBON Foundation, which has added its voice to criticisms on the WEF.

‘The recent growth in the Philippine economy is artificial, narrow, debt-driven and unsustainable. It is accompanied by worsening job generation, growing unemployment and exclusionary growth, mainly in the narrow real-estate and construction sectors. These sectors are supported by record-low interest rates, which have made financing for production and for consumption artificially cheap. While it artificially increases economic activity, this situation of cheap financing is only momentary,’ the group said.

Amid the slow recovery in many developed countries, IBON said foreign corporations are looking at potential markets where they could direct their excess capital in speculative areas and take advantage of opportunities to profit. International credit agencies, foreign transnational firms and local big business groups support the Aquino administration and its neoliberal economic direction, and this explains the positive assessments, credit-rating upgrades, and favourable tags given to the country.

A top Filipino businessman, Manuel V Pangilinan, whose group of companies operates toll roads, telecommunications firms, mining pits and power utilities, said while reforms are laudable, the government still needs to address many critical issues necessary for economic growth.

‘Certainly, the soft spot of development is important – reforms, governance and perception of the Philippines – but there are hard parts of development as well. It can’t be all perception,’ said Pangilinan, who wants the government to cut red tape, reduce the cost of power and build more infrastructure.

And for social entrepreneur Cherrie Atilano, who works with Filipino farmers, the much touted Philippine miracle is not trickling down to the grassroots.

‘We cannot really feel it. It’s so hard to feel how 7.2 per cent is mainstreaming into the grassroots. We need to make sure that once you create wealth you don’t leave people behind,’ Atilano said during Thursday’s WEF opening.

Indeed, when the hype is over, the Shangri-La Hotel goes back to its daily grid, the dignitaries fly back to their home countries and the WEF curtains close at the end of the two-day meeting, real issues of poverty, lack of education, deteriorating public health infrastructure and rampant corruption still need to be addressed.

First thing I looked for after reading the title was the author's name. Ahh! A Filipino! Classic. What a shame. Haven't you heard what Sycip said yesterday? ’Have confidence with your nation!’People, please stop being cynicss. Just show up and get things f****** done!

Thanks for your comment. I certainly have hope and confidence in my country which is why I keep on writing about it. I wouldn't be doing so if I think this nation is hopeless. Of course, I do agree with the well respected and altruistic Mr. Sycip but let us not forget that there is a huge difference between what he, as Forbes-listed Filipino billionaire sees and feels and that of Filipino farmers, as Ms. Atilano noted.

Thanks for your message, Win. I wasn't trying to mislead in the choice of photo. As the caption suggests, I was trying to show a side of Manila which the delegates to the WEF would never see - poor Filipinos struggling to cope with daily life in an area prone to flooding.

Thanks for your comment. Filipinos are the biggest critics, I agree. Who else would know how the home is than the residents themselves. I am not trying to pull my country down. Believe me, I would be the first to laud the government once growth trickles down to the grassroots but the problems plaguing this nation are not products of my imagination. There's a lot of progress but there's a lot more that needs to be done and these are much more important than perception.

The title of this blog disturbs me so much that my focus would redirect more on the attitude of the author than the subject itself. I appreciate the credentials of the blogger but, for me, she fails this one, big-time -- only for her choice of the title. Why can't the author give chance for our country to progress? Instead, she's belittling the economic achievement our country just got recently...Why can't she just give a title of this blog that could inspire more Filipinos to work harder? I'm really disappointed with the title. I'm ashamed. It's so untimely -- very futile!

I've spent some time in Manila, and was shocked (not to mention radicalised) by the huge differential between poverty and affluence in such close proximity. Made me wonder how the Filipino upper classes, and Western visitors, can carry on as if nothing is wrong, when this is right on their doorstep.

Great article, anyway, shows how a high growth rate is a meaningless measure of prosperity if only a narrow elite actually benefit from it. Manila is an example of how, if capitalism is 'working', it's only working for a priviledged minority.

Thanks for your comments. I do like the title but credit goes to my editor Jo Lateu. She can best explain her choice but I agree with it because it hits right home. Inasmuch that I don't want to sound hopeless and cynical, the situation in the Philippines is really far from good. One has to look past perception and to the situation of the majority. It's getting better but far from being a miracle.

I agree that the philippines won't be the next asian miracle, but, you have to give credit to the efforts of the current admin compared to his predecessors. remember, the philippines was once the pearl of the orient after world war 2. but it took almost 4 decades of mismanagement until we rich the title of the sick man of asia. the author should at least consider that the trickle down effect that you everyone was looking for will not immediately come overnight. gdp per capita is just below 3,000, so what do you expect. it took china more than 10yrs of almost double digit growths to reach its status today. it took singapore and malaysia 10yrs to grow more than 6% annually to be the economic powerhouse of southeast asia. the present admin after 4 1/2 yrs in power had achieved an average growth of 6% annually, if the next admin can maintain it for the next 6+yrs, then maybe by that time, we can complain if this 6% annual growth will not trickle down to the common filipinos.

About the author

Iris Cecilia Gonzales
is a Filipino journalist and blogger. At present, she covers economic
news for a Manila broadsheet, but she also writes other stories
here and there. She has been blogging
since 2004 on various issues including women and children and human
rights. She is among the winners in the TH!NK 3 global blogging
competition organized by the Netherlands-based European Journalism
Centre.

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